US equities rose after the Federal Reserve delivered a 25bp rate increase, while volatility eased and oil prices fell in the immediate aftermath. The market reaction came within the first 24 hours of trading following the decision, with rate uncertainty giving way to a clearer policy path.
Attention is now turning to whether September’s Vix high is already in place after three weeks of relatively limited volatility. Beyond seasonality, traders are watching conditions around Hormuz and whether Saudi Arabia can restore flows through the East-West pipeline; a stabilisation on both fronts would shift the focus back towards strong earnings and the foundations for a Q4 rally. Chris Beauchamp, chief market analyst at IG, has been at the firm for four years and is a regular commentator across financial media, including the BBC and Sky News.
Relief Rally And Market Reactions To Fed Decision
We are seeing a major wave of relief sweep through the financial markets now that the Federal Reserve’s highly anticipated September interest rate decision is finally behind us. For weeks, the anxiety of waiting for this rate policy update weighed heavily on equities, but the resolution has immediately reignited investor risk appetite. Derivative traders should note that stocks are pushing higher while volatility measures are already beginning to cool off.
Historical Volatility Patterns And Trading Opportunities
This post-meeting bounce fits perfectly with historical patterns, as September has historically been the most volatile month of the year, with the S&P 500 averaging a 1.2% decline since 1928. Now that the Cboe Volatility Index (VIX) has likely hit its seasonal peak, we expect a steady stabilization in asset prices over the coming weeks. If global energy supply lines remain calm and oil prices continue to settle, the market can refocus on strong fundamental drivers.
For derivative traders, this shift presents an excellent opportunity to transition away from expensive defensive hedges and prepare for a classic fourth-quarter rally. We believe targeting call options on broad-market indices or utilizing volatility spread strategies will be highly effective as uncertainty fades. Historically, the final three months of the year represent the strongest quarter for equities, boasting an average S&P 500 return of over 4%.
